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Asheville projects FY26 revenue dip; staff outlines $4.5M in savings and tax scenarios to protect fund balance
Summary
City staff told the Asheville City Council that projected FY26 general fund revenues could be down $1–4 million and outlined $4.5 million in initial savings while presenting property tax scenarios to protect fund balance and bond ratings.
City staff presented initial FY26 general fund projections at a budget work session and asked council whether staff should develop budgets that include property tax scenarios to maintain the city's fund balance and bond rating.
Budget Manager Lindsey Spangler and Finance Director Tony McDowell said current projections show general fund revenues may be down between $1 million and $4 million next fiscal year, reflecting an estimated 1.25–1.5% decrease in the property tax base and continued uncertainty in sales tax receipts. The city used approximately $7.7 million of fund balance this fiscal year and currently projects ending FY25 with an unassigned fund balance of about 15.9% (the city's 15% policy target).
To address unavoidable cost increases (notably health care and retirement), staff identified roughly $4.5 million in initial savings that avoid core service reductions. Those measures include a hiring review (personnel vacancy savings), pausing the OPEB trust fund contribution for one year, a 50% reduction in training and travel, use of FEMA and CDBG‑DR funding where eligible to supplant personnel costs, pausing the annual general‑fund contribution to the housing trust fund, pausing the strategic partnership grant program, and reducing neighborhood matching grants.
Staff modeled scenarios that would require an additional $11.3 million of fund balance appropriation to balance the preliminary FY26 budget as presented; using that amount would reduce the unassigned fund balance to just under 10%. To hold fund balance near current levels, staff showed a range of property‑tax options: maintaining the current 15.9% fund balance would require a 5.65‑cent property tax increase in their model; holding at the 15% policy minimum would require about a 4.65‑cent increase. Staff emphasized these are preliminary projections and will change as revenue updates arrive and as council gives direction on compensation and other items.
Council members asked staff to provide additional detail on what service‑level reductions were considered but not recommended, more information on OPEB and timing for wage/compensation options, and the team said they will return with wage scenarios at the next work session and refined revenue numbers ahead of budget adoption.
